December 2, 2011

IRS Plans to Change Compliance Model to ‘Real Time’ From ‘Look Back’

Goal is to improve tax filing process and reduce frustrations

In an initiative to streamline the tax filing process, the IRS is moving away from its traditional “look back” model of compliance toward a substantially more “real time” one, and will seek public feedback about how to implement the change in a series of meetings, starting Dec. 8.

IRS Commissioner Doug Shulman said in a speech last April that under a real-time tax system, the IRS could match information submitted on a tax return with third-party information up front during processing, and could provide the opportunity for taxpayers to fix the tax return before acceptance if it contains data that do not match IRS records.

At present, the IRS conducts a significant number of compliance activities several months after the tax return has been filed and processed. As a result, it is not uncommon for a taxpayer to receive a notice 12 to 18 months after filing a tax return. This compliance approach can create problems and frustrations for both taxpayers and the IRS, the agency said in a statement.

The first public meeting, which will take place at IRS headquarters in Washington, will feature representatives of consumer groups, the tax professional community and government representatives.  A future public meeting will include representatives of the employer and payroll community, the software industry, financial institutions and additional government representatives.  

The IRS said that those interested in attending the meeting should email the IRS at CL.NPL.Communications@irs.gov with attendees’ contact information or call the agency at 202-622-3359.

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